Question 1

Proper asset allocation can

Accepted Answer

A)  increase your wealth. 
B)  decrease your assets. 
C)  increase your dividend income and decrease your interest income. 
D)  increase your expenses. 
A)  increase your wealth. 
B)  decrease your assets. 
C)  increase your dividend income and decrease your interest income. 
D)  increase your expenses.

Question 2

As you allocate more of your investment portfolio to bonds, you reduce your exposure to ________ risk, but increase your exposure to ________.

Accepted Answer

A)  interest rate; business risk 
B)  business; default risk 
C)  market; interest rate risk 
D)  default; liquidity risk 
A)  interest rate; business risk 
B)  business; default risk 
C)  market; interest rate risk 
D)  default; liquidity risk

Question 3

To which of the following markets would an investment adviser recommend you allocate approximately 80% of your money if you wanted to maintain a relatively low degree of risk?

Accepted Answer

A)  European stocks 
B)  Asian stocks 
C)  U.S. stocks 
D)  Latin American stocks 
A)  European stocks 
B)  Asian stocks 
C)  U.S. stocks 
D)  Latin American stocks

Question 4

Use the following two columns of items to answer the matching questions below:
-bonds
A)stock's susceptibility to poor performance due to weak stock market conditions
B)REITs that invest money directly in properties
C)an option to purchase or sell stocks under specified conditions
D)debt securities
E)right to purchase 100 shares of a specific stock at a specific price by a specific date

Accepted Answer

The answer of Use the following two columns of items...

Question 5

Stock options

Accepted Answer

A)  are traded on exchanges. 
B)  are relatively simple. 
C)  are less risky than stocks. 
D)  pay dividends. 
A)  are traded on exchanges. 
B)  are relatively simple. 
C)  are less risky than stocks. 
D)  pay dividends.

Question 6

In reality, many stocks are influenced by ________ the stock market overall.

Accepted Answer

A)  different conditions than 
B)  the same conditions as 
C)  other conditions than 
D)  unrelated conditions to 
A)  different conditions than 
B)  the same conditions as 
C)  other conditions than 
D)  unrelated conditions to

Question 7

In general, the ________ the proportion of your portfolio that is allocated to bonds, the ________ will be your portfolio's overall risk.

Accepted Answer

A)  larger; lower 
B)  smaller; lower 
C)  larger; higher 
D)  None of the above. 
A)  larger; lower 
B)  smaller; lower 
C)  larger; higher 
D)  None of the above.

Question 8

The objective of diversification in an investment portfolio is

Accepted Answer

A)  to make sure you have all your eggs in one basket. 
B)  to eliminate non-systematic or company specific risk. 
C)  to eliminate systematic portfolio risk. 
D)  to hold a lot of strong growth stocks. 
A)  to make sure you have all your eggs in one basket. 
B)  to eliminate non-systematic or company specific risk. 
C)  to eliminate systematic portfolio risk. 
D)  to hold a lot of strong growth stocks.

Question 9

You can best reduce investment risk by investing in

Accepted Answer

A)  a corporate bond. 
B)  a portfolio of investments. 
C)  corporate stocks. 
D)  real estate. 
A)  a corporate bond. 
B)  a portfolio of investments. 
C)  corporate stocks. 
D)  real estate.

Question 10

In general, the larger the proportion of your portfolio that is allocated to bonds, the lower will be your portfolio's overall risk.

Accepted Answer

A) True 
 B)False

Question 11

The price at which an option allows you to purchase or sell shares of stock is the ________ price.

Accepted Answer

The answer of The price at which an option allows...

Question 12

Use the following two columns of items to answer the matching questions below:
-call option
A)stock's susceptibility to poor performance due to weak stock market conditions
B)REITs that invest money directly in properties
C)an option to purchase or sell stocks under specified conditions
D)debt securities
E)right to purchase 100 shares of a specific stock at a specific price by a specific date

Accepted Answer

The answer of Use the following two columns of items...

Question 13

________ REITs invest money directly in properties.

Accepted Answer

A)  Asset 
B)  Equity 
C)  Mortgage 
D)  Property 
A)  Asset 
B)  Equity 
C)  Mortgage 
D)  Property

Question 14

The greater the proportion of stocks to bonds in your portfolio, the greater the ________ risk.

Accepted Answer

A)  interest rate 
B)  reinvestment 
C)  inflation 
D)  market 
A)  interest rate 
B)  reinvestment 
C)  inflation 
D)  market

Question 15

Diversifying among stocks based in countries outside the United States

Accepted Answer

A)  makes your portfolio less vulnerable to conditions in the United States. 
B)  is too expensive to use as a means of diversification. 
C)  makes your portfolio's returns less volatile because foreign stocks are less volatile than U.S. stocks. 
D)  is too risky for individual investors to consider. 
A)  makes your portfolio less vulnerable to conditions in the United States. 
B)  is too expensive to use as a means of diversification. 
C)  makes your portfolio's returns less volatile because foreign stocks are less volatile than U.S. stocks. 
D)  is too risky for individual investors to consider.

Question 16

Use the following two columns of items to answer the matching questions below:
-equity REITs
A)stock's susceptibility to poor performance due to weak stock market conditions
B)REITs that invest money directly in properties
C)an option to purchase or sell stocks under specified conditions
D)debt securities
E)right to purchase 100 shares of a specific stock at a specific price by a specific date

Accepted Answer

The answer of Use the following two columns of items...

Question 17

Call options are the right to buy stock and put options are the right to sell stock, but both types of options can be either bought or sold.

Accepted Answer

A) True 
 B)False

Question 18

A(n) ________ allows an investor to invest in real estate without owning individual property.

Accepted Answer

real estat

Question 19

Your asset allocation should not be influenced by

Accepted Answer

A)  your risk tolerance. 
B)  economic conditions. 
C)  religion. 
D)  your age. 
A)  your risk tolerance. 
B)  economic conditions. 
C)  religion. 
D)  your age.

Question 20

When two companies' profits tend to move in opposite directions in response to changing economic factors, the companies are likely

Accepted Answer

A)  negatively correlated. 
B)  not correlated. 
C)  unrelated in industry sector. 
D)  in different regions of the world. 
A)  negatively correlated. 
B)  not correlated. 
C)  unrelated in industry sector. 
D)  in different regions of the world.

Proper asset allocation can

As you allocate more of your investment portfolio to bonds, you reduce your exposure to risk, but increase your exposure to .

To which of the following markets would an investment adviser recommend you allocate approximately 80% of your money if you wanted to maintain a relatively low degree of risk?

Stock options

In reality, many stocks are influenced by ________ the stock market overall.

In general, the the proportion of your portfolio that is allocated to bonds, the will be your portfolio's overall risk.

The objective of diversification in an investment portfolio is

You can best reduce investment risk by investing in

In general, the larger the proportion of your portfolio that is allocated to bonds, the lower will be your portfolio's overall risk.

The price at which an option allows you to purchase or sell shares of stock is the ________ price.

________ REITs invest money directly in properties.

The greater the proportion of stocks to bonds in your portfolio, the greater the ________ risk.

Diversifying among stocks based in countries outside the United States

Call options are the right to buy stock and put options are the right to sell stock, but both types of options can be either bought or sold.

A(n) ________ allows an investor to invest in real estate without owning individual property.

Your asset allocation should not be influenced by

When two companies' profits tend to move in opposite directions in response to changing economic factors, the companies are likely

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters

Exam 18: Asset Allocation

Proper asset allocation can

As you allocate more of your investment portfolio to bonds, you reduce your exposure to ________ risk, but increase your exposure to ________.

To which of the following markets would an investment adviser recommend you allocate approximately 80% of your money if you wanted to maintain a relatively low degree of risk?

Stock options

In reality, many stocks are influenced by ________ the stock market overall.

In general, the ________ the proportion of your portfolio that is allocated to bonds, the ________ will be your portfolio's overall risk.

The objective of diversification in an investment portfolio is

You can best reduce investment risk by investing in

In general, the larger the proportion of your portfolio that is allocated to bonds, the lower will be your portfolio's overall risk.

The price at which an option allows you to purchase or sell shares of stock is the ________ price.

________ REITs invest money directly in properties.

The greater the proportion of stocks to bonds in your portfolio, the greater the ________ risk.

Diversifying among stocks based in countries outside the United States

Call options are the right to buy stock and put options are the right to sell stock, but both types of options can be either bought or sold.

A(n) ________ allows an investor to invest in real estate without owning individual property.

Your asset allocation should not be influenced by

When two companies' profits tend to move in opposite directions in response to changing economic factors, the companies are likely

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters

As you allocate more of your investment portfolio to bonds, you reduce your exposure to risk, but increase your exposure to .

In general, the the proportion of your portfolio that is allocated to bonds, the will be your portfolio's overall risk.